FSG and the long Liverpool goodbye
Amit Bhatia is leading a consortium to take a minority stake in the Reds
“I think we’ve got an agenda sorted for tomorrow.”
Before every ‘Money Talks’ show that I do with The Anfield Wrap, John Gibbons drops me a message to pick my brain over what we should do for the show.
Post World Cup, and with Liverpool having jetted out to the US this week, the expectation was that this would be a show that was focused on what pre-season in America could do for Liverpool given that the biggest sporting show on the planet had left town literally a few days ago.
But on Tuesday, a report from the excellent Samuel Agini at The Financial Times stated that Liverpool owners Fenway Sports Group were in preliminary discussions with a consortium fronted by former Queen’s Park Rangers director and co-owner Amit Bhatia over the sale of a minority stake in the Reds.
Earlier that same day it had been reported that Bhatia had sold his stake in QPR, one he had held for 18 years, to majority owner Ruben Gnanalingam, a move that paved the way for knowledge of his discussions with FSG to make it into the public domain.
What has been reported thus far is that Bhatia, the son-in-law of Indian steel magnate Lakshmi Mittal, is putting together a consortium of wealthy individuals who can put both capital and expertise to work to aid an investment play in the Reds. Mittal is understood to be part of that group.
There are others, though, and the focus these past few days has been on one man: Jeff Bezos.
As the world’s third richest man, with a fortune of $245bn, the Amazon founder’s potential inclusion as a member of the consortium was one that drew the headlines. Indeed, I spent a part of my day on Wednesday live on Sky Sports News talking about the potential for a minority stake purchase, and much of the line of questioning focused on Bezos.
Zooming out a little, and attempting to remove some of the noise around Bezos’ potential involvement, I spent the last couple of days reaching out to some people with familiarity with the matter to gauge what the temperature was.
FSG won’t say much. They seldom do. A statement was put out that confirmed the interest, and that will be all that is forthcoming until such time that a deal is ready to be done, or that it bites the dust.
Bhatia’s representatives also aren’t making an official comment on the situation at the time, but he has engaged representatives to face those questions when the time comes for something concrete to be made public.
Sources have indicated to me that Bhatia is still in the process of putting together his consortium, although it will likely not reach double digits in number. Will Bezos be part of that? He has been approached, it is being discussed, but it has not yet been agreed. His potential involvement in investing in the football club is not erroneous chatter, it is based in truth.
As usually happens, some snappy graphics and hot takes on Bezos being owner and pouring billions in for Liverpool to spend like Brewster’s Millions have flooded the internet. Much of the noise and supposition is incorrect.
It has to be stressed that this is a deal at the preliminary stages, and that there is a way to go before a resolution. But from what well-placed sources have told me in the last 24 hours, this is a “largely passive” investment, even if the actual percentage may well fall between 20% and 30%.
What that means is that this is an investment play that has been identified by Bhatia, who knows the English game inside out and has a diverse portfolio, with the billionaire seeing the strong chance of a good return on his investment over the next five to seven years.
What Bhatia is trying to do is put together a consortium that not only has the financial wherewithal to pull this investment off, which let’s not forget, at a £4.5bn valuation would cost some £ 1.35bn at a 30% stake, but also has the connections and the expertise, and plug-in points to relevant industries and opportunities, whether it be tech or commercial, that can take Liverpool on to the next level as a business.
When FSG were open to selling a minority stake back in 2022/23, I was sent a pitch deck by a firm that was looking to raise funds for investing into Liverpool. I’m not naming the firm, but the head was a former owner of a major European football club who had seen the Reds opportunity through the same lens as Bhatia.
This proposal claimed that Liverpool could be a £1bn revenue business before 2030, and had the potential to reach £9bn in value around the 2030 mark.
Is that correct? Maybe not. After all, it was a pitch deck to appeal to investors to part with large sums of cash. But it was rooted in some pretty solid belief that Liverpool has a growth trajectory that is still incredibly significant, especially as a business that has global exposure, is recession proof and has potential untapped global audience opportunities through the adoption of new technology to monetise fandom in different countries.
Bhatia has a portfolio with plug-ins to plenty of relevant industries, and if you think about the clout that someone like Bezos brings, with his deep connections in tech and e-commerce, that could be significant.
But this is about return. FSG will sell Liverpool at some point. That isn’t a hot take or some insightful knowledge for clickbait. It is just a statement of fact that anyone could make. Nothing is forever, and John Henry himself said previously that they would not be in English football forever. But they will be in it for a little while longer.
The likely play here is that if a deal with a Bhatia consortium gets done it helps a few things. It strengthens the balance sheet, dilutes some risk on FSG’s behalf, potentially realises partial liquidity for some of FSG’s many partners, and also has a group of individuals at the table with the resource and knowledge to accrete their stake over time until such time that FSG are willing to pass the torch and assume responsibility to someone else.
Henry’s firm bought Liverpool for £300m in 2010. At the £4.5bn valuation that is an increase of 1,400%. That return significantly outperforms the performance of the S&P 500 over the same timeframe, which sits at around 600% growth. Not a bad investment play at all.
But the game is becoming more expensive to play, and with the continued expectation to participate in a bloated transfer market with ever-increasing payroll obligations, not to mention the heightened cost of other business costs against a backdrop of the potential diminution in the value of Premier League TV rights over the next decade as broadcasters face their own revenue challenges due to declining subscriber numbers, it makes sense to start to think about what comes next, and how to exit.
There was also the frustration around the lack of a multi-club plan coming to fruition, one that was supposed to be helmed by the now former CEO of Football for FSG, Michael Edwards.
Frustrations over finding the right club for the right price rumbled on, with inflated valuations and restrictions on the usage of stadia in some instances, notably Bordeaux, ultimately meaning a sensible investment play wasn’t blindingly obvious.
They are 16 years into ownership now. The Premier League has twice been won, and a Champions League crown achieved. The stadium has been redeveloped to a world class level and the club are at the elite tier again in terms of performance.
An end to the story comes sometime, and it’s closer than it was yesterday. But that’s not news. What this deal potentially does is start to crystallise the plan for what happens next, whether that be in two, five or 10 years. The latter seems too long a time frame, if we’re being honest here.
FSG remains committed to the football club. That is the line and it has always been the line. When I spoke to Henry in 2023 while I was at the Liverpool Echo he stressed the point that they hadn’t wavered from that, and that they were both financially and emotionally invested in Liverpool.
But Henry will be well aware that the pool of would-be investors and club owners is shallow when you get to the mid-billions in value. They already have some private equity investment through Dynasty Equity, which was strategic to reduce some bank debt. The addition of Bhatia’s consortium points to wealth, football expertise and connections to support business growth.
Sources have told me Bhatia’s consortium would not be running the football club. FSG have their hands still on the wheel. It will be for a while yet, but this feels like the first time where a meaningful conversation can be had about what succession planning looks like.